The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Why Investors Care
| Released on 12/12/07 For Oct 2007 | ||||||||||||
| ||||||||||||
Highlights
The U.S. trade gap widened in October to $57.8 billion from a revised $57.1 billion in September. The October trade shortfall came in larger than the consensus forecast for a $57.0 billion gap and compares with the initial estimate for September of $56.5 billion. The worsening reflects import growth outstripping export growth with a jump in oil imports being the primary reason. Today's report will weigh on the dollar and could put upward pressure on U.S interest rates. A jump in import prices will be adding to these effects. Nonetheless, exports continue on an upward trend and are providing support for U.S. economic growth. Exports set a record high in October.
The merchandise trade gap (Census basis) in October grew to $64.8 billion from a revised $63.8 billion deficit in September. The goods gap excluding petroleum narrowed to $38.5 billion in October from $39.7 billion in September.
Goods export strength in October according to end-use categories was only in capital goods which rebounded $1.279 billion, following a $398 million drop in September. The swing in both months reflected volatility in aircraft shipments. Other end-use categories were down but following gains in September. Declines were as follows: industrial supplies, down $203 million; food, feeds & beverages, down $514 million; consumer goods, down $407 million; and automotive, down $3 million.
Goods import strength in October was in industrial supplies, up $1.878 billion, and in consumer goods, up $445 million. Automotive also posted an incremental gain of $71 million. Declines were seen in foods, feeds & beverages, down $114 million, and in capital goods, down $471 million.
The recent spike in oil prices is the main reason the deficit jumped in October. The oil trade deficit surged in October to $26.3 billion from $24.2 billion in September. Crude oil prices in October rose sharply, jumping to $72.49 per barrel from $68.51 per barrel in September.
On a bilateral basis, the goods deficit with the European Union increased from $6.4 billion in September to $11.9 billion in October. The goods deficit with Japan increased from $6.2 billion in September to $8.0 billion in October. The goods deficit with China increased from $23.8 billion in September to $25.9 billion in October. Country balances are not seasonally adjusted.
Today's report shows a continuation of recent trends in several areas. The weak dollar has boosted exports and this should continue. Imports rebounded and not just in oil imports. Businesses brought in large amounts of consumer goods, indicating at least a few months ago optimism about the economy. While exports hit a record high with the latest data, markets are likely to focus more on the oil induced gap and pressure on the dollar. That and a jump in import prices will add to inflation worries.
The U.S. international trade gap unexpectedly narrowed slightly in September to $56.5 billion from a revised $56.8 billion in August. The improvement reflected exports rising notably faster than import gains. The weak dollar helped exports, notably with strength in September in food, feeds & beverages; industrial supplies, and consumer goods. A slip in capital goods exports was primarily related to volatility in aircraft exports. Import strength in September was in capital goods, automotive, and consumer goods. Industrial supplies declined despite a jump in the crude oil subcomponent. Based on continued weakness in the dollar and healthy economic growth overseas, exports are likely to continue upward. Oil imports are likely to jump due to higher prices but non-oil imports either will slow due to softening U.S. demand or inventories will be building and eventually will force slower import growth. One definitely will have to look at export and import components and price effects to fully sort out export and import trends - the overall trade gap will not be saying much alone except for near-term impact on the dollar.
International trade balance Consensus Forecast for October 07: -$57.0 billion
Range: -$58.6 billion to -$55.5 billion
![[Chart]](chart.gif)
|
Exports grow when foreign economies are strong. The weaker the foreign exchange value of the dollar, the less expensive goods and services are to foreigners, and this also helps spurt export activity. Imports grow when U.S. economic growth is robust. Imports are also spurred by a strong foreign exchange value of the dollar. |
![[Chart]](chart_1.gif)
|
The international trade balance has posted a deficit almost continuously since the 1980s. Any trade deficit is a drag on U.S. GDP growth, but a smaller deficit adds to growth, while a larger deficit decreases GDP growth. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}